how to apply text to photo?

Assuming you're referring to iPhoto on your Mac (this is the iPhoto for iOS community) you'll need to use a 3rd party image editor.

Some Image Editors That Support layers:

Photoshop Elements 11 for Mac - $79

GraphicConverter - $40Rainbow Painter - $30
Imagerie - $38
Acorn - $50

Pixelmator - $60

Seashore - Free

GIMP for Mac - Free

Xee 2.1 - free

The Preview app can also add text to a photo via its annotation feature. Pages can also add text to a photo once it's been imported into a Page layout.

in addition to Old Toad's list of external editors, you could also use a plug-in.

You could try the BorderFX plug-in for iPhoto. It will let you put borders around the photo, write text to the border or directly onto the photo, add metadata like title or date from the iPhoto library.

You can use this plug-in from the Export panel when you export your photo from iPhoto. Have a look at the webpage:

BorderFX - iBorderFX iPhoto http://www.iborderfx.com/iborderfx/

Isn't what Old Toad wrote?

The Preview app can also add text to a photo via its annotation feature. Pages can also add text to a photo once it's been imported into a Page layout.