1 Year Apple waranty voided and useless

I took my Apple iPhone 6 into iStore Brooklyn on Thursday the 11th of February 2016 after the microphone stopped working. The iPhone is still under warranty, but is almost a year old now. They booked the device in for possible repairs. I was however surprised to receive a phone call that Apple said they do not fix iPhones, they are replaced, and that mine cannot be fixed but needs to be replaced. However, they will charge me R6500 for a replacement unit because of the devices 'physical damage' . So the physical damage they are referring to is a chip in my screen when my phone fell approximately 15cm out of my pocket on a trip in Milan, last year the 20th of September. The microphone stopped working on the 10th of February, 5 and a half months after the 'physical damage' occurred. I do not find the rational acceptable and I expect better service from Apple. That is the equivalent of Mercedes suspending my 5 year maintenance plan because I scratched a rim or chipped my windscreen. It is totally unrelated. I expect a report from Apple that the device has been tested and that it is infact not functioning due to that specific event. This is not acceptable at all.