Hello Kam
Pinging from R1 to R3 will work whether you have the access list applied to Fa0/1 or not, as the access list will allow traffic from R1 to R3 as well as responding traffic. Try pinging from R3 to R1 to see if the access list is blocking.
Now it is true that the access list is applied to a layer 2 interface, however, access lists that are configured to inspect tcp, udp and icmp as is the case here will also check higher level protocols to determine if a frame can be forwarded or should be dropped.
Let us know of your results and if need be, we can help you further…
I hope this has been helpful!
Laz