diff --git a/pkg/engine/mutation.go b/pkg/engine/mutation.go
index 2eb42a19d2..fe367a2def 100644
--- a/pkg/engine/mutation.go
+++ b/pkg/engine/mutation.go
@@ -56,11 +56,8 @@ func Mutate(policy kyverno.Policy, resource unstructured.Unstructured) EngineRes
 
 				ruleInfo.Addf("Rule %s: Overlay succesfully applied.", rule.Name)
 
-				// merge the json patches
-				patch := JoinPatches(rulePatches)
-
 				// strip slashes from string
-				ruleInfo.Changes = string(patch)
+				ruleInfo.Patches = rulePatches
 				allPatches = append(allPatches, rulePatches...)
 
 				glog.V(4).Infof("overlay applied succesfully on resource %s/%s", resource.GetNamespace(), resource.GetName())
@@ -83,6 +80,8 @@ func Mutate(policy kyverno.Policy, resource unstructured.Unstructured) EngineRes
 			} else {
 				glog.V(4).Infof("patches applied succesfully on resource %s/%s", resource.GetNamespace(), resource.GetName())
 				ruleInfo.Addf("Patches succesfully applied.")
+
+				ruleInfo.Patches = rulePatches
 				allPatches = append(allPatches, rulePatches...)
 			}
 		}
@@ -96,6 +95,11 @@ func Mutate(policy kyverno.Policy, resource unstructured.Unstructured) EngineRes
 	}
 
 	patchedResource, err := ConvertToUnstructured(patchedDocument)
+	if err != nil {
+		glog.Errorf("Failed to convert patched resource to unstructuredtype, err%v\n:", err)
+		return EngineResponse{PatchedResource: resource}
+	}
+
 	return EngineResponse{
 		Patches:         allPatches,
 		PatchedResource: *patchedResource,
diff --git a/pkg/engine/validation.go b/pkg/engine/validation.go
index 29e017befa..2d8e36560c 100644
--- a/pkg/engine/validation.go
+++ b/pkg/engine/validation.go
@@ -20,7 +20,7 @@ import (
 func Validate(policy kyverno.Policy, resource unstructured.Unstructured) EngineResponse {
 	resourceRaw, err := resource.MarshalJSON()
 	if err != nil {
-		glog.V(4).Infof("unable to marshal resource : %v\n", err)
+		glog.V(4).Infof("Skip processing validating rule, unable to marshal resource : %v\n", err)
 		return EngineResponse{PatchedResource: resource}
 	}
 
diff --git a/pkg/info/info.go b/pkg/info/info.go
index d8b742e350..b8aaa57db3 100644
--- a/pkg/info/info.go
+++ b/pkg/info/info.go
@@ -104,7 +104,7 @@ type RuleInfo struct {
 	Name     string
 	RuleType RuleType
 	Msgs     []string
-	Changes  string // this will store the mutation patch being applied by the rule
+	Patches  [][]byte // this will store the mutation patch being applied by the rule
 	success  bool
 }
 
diff --git a/pkg/webhooks/annotations.go b/pkg/webhooks/annotations.go
new file mode 100644
index 0000000000..41a37633f7
--- /dev/null
+++ b/pkg/webhooks/annotations.go
@@ -0,0 +1,113 @@
+package webhooks
+
+import (
+	"encoding/json"
+
+	"k8s.io/apimachinery/pkg/apis/meta/v1/unstructured"
+
+	jsonpatch "github.com/evanphx/json-patch"
+	"github.com/golang/glog"
+	"github.com/nirmata/kyverno/pkg/info"
+)
+
+const (
+	policyAnnotation = "policies.kyverno.io"
+	// lastAppliedPatches = policyAnnotation + "last-applied-patches"
+)
+
+type policyPatch struct {
+	PolicyName string `json:"policyname"`
+	// RulePatches []string `json:"patches"`
+	RulePatches interface{} `json:"patches"`
+}
+
+type rulePatch struct {
+	RuleName string `json:"rulename"`
+	Op       string `json:"op"`
+	Path     string `json:"path"`
+}
+
+type response struct {
+	Op    string      `json:"op"`
+	Path  string      `json:"path"`
+	Value interface{} `json:"value"`
+}
+
+func prepareAnnotationPatches(resource *unstructured.Unstructured, policyInfos []info.PolicyInfo) []byte {
+	annots := resource.GetAnnotations()
+	if annots == nil {
+		annots = map[string]string{}
+	}
+
+	var patchResponse response
+	value := annotationFromPolicies(policyInfos)
+	if _, ok := annots[policyAnnotation]; ok {
+		// create update patch string
+		patchResponse = response{
+			Op:    "replace",
+			Path:  "/metadata/annotations/" + policyAnnotation,
+			Value: string(value),
+		}
+	} else {
+		patchResponse = response{
+			Op:    "add",
+			Path:  "/metadata/annotations",
+			Value: map[string]string{policyAnnotation: string(value)},
+		}
+	}
+
+	patchByte, _ := json.Marshal(patchResponse)
+
+	// check the patch
+	_, err := jsonpatch.DecodePatch([]byte("[" + string(patchByte) + "]"))
+	if err != nil {
+		glog.Errorf("Failed to make patch from annotation'%s', err: %v\n ", string(patchByte), err)
+	}
+
+	return patchByte
+}
+
+func annotationFromPolicies(policyInfos []info.PolicyInfo) []byte {
+	var policyPatches []policyPatch
+	for _, policyInfo := range policyInfos {
+		var pp policyPatch
+
+		pp.PolicyName = policyInfo.Name
+		pp.RulePatches = annotationFromPolicy(policyInfo)
+		policyPatches = append(policyPatches, pp)
+	}
+
+	result, _ := json.Marshal(policyPatches)
+
+	return result
+}
+
+func annotationFromPolicy(policyInfo info.PolicyInfo) []rulePatch {
+	if !policyInfo.IsSuccessful() {
+		glog.V(2).Infof("Policy %s failed, skip preparing annotation\n", policyInfo.Name)
+		return nil
+	}
+
+	var rulePatches []rulePatch
+	for _, ruleInfo := range policyInfo.Rules {
+
+		for _, patch := range ruleInfo.Patches {
+			var patchmap map[string]string
+
+			if err := json.Unmarshal(patch, &patchmap); err != nil {
+				glog.Errorf("Failed to parse patch bytes, err: %v\n", err)
+				continue
+			}
+
+			rp := rulePatch{
+				RuleName: ruleInfo.Name,
+				Op:       patchmap["op"],
+				Path:     patchmap["path"]}
+
+			rulePatches = append(rulePatches, rp)
+			glog.V(4).Infof("Annotation value prepared: %v\n", rulePatches)
+		}
+	}
+
+	return rulePatches
+}
diff --git a/pkg/webhooks/mutation.go b/pkg/webhooks/mutation.go
index a54a6151f4..88c60afa4a 100644
--- a/pkg/webhooks/mutation.go
+++ b/pkg/webhooks/mutation.go
@@ -62,18 +62,20 @@ func (ws *WebhookServer) HandleMutation(request *v1beta1.AdmissionRequest) (bool
 			}
 			continue
 		}
-		// build annotations per policy being applied to show the mutation changes
-		patches = append(patches, engineResponse.Patches...)
-		glog.V(4).Infof("Mutation from policy %s has applied succesfully to %s %s/%s", policy.Name, request.Kind.Kind, resource.GetNamespace(), resource.GetName())
 
+		patches = append(patches, engineResponse.Patches...)
+		policyInfos = append(policyInfos, policyInfo)
+		glog.V(4).Infof("Mutation from policy %s has applied succesfully to %s %s/%s", policy.Name, request.Kind.Kind, resource.GetNamespace(), resource.GetName())
 	}
 
 	// ADD ANNOTATIONS
-	// TODO: merge the annotation patch with the patch response
 	// ADD EVENTS
 	if len(patches) > 0 {
 		eventsInfo := newEventInfoFromPolicyInfo(policyInfos, (request.Operation == v1beta1.Update), info.Mutation)
 		ws.eventGen.Add(eventsInfo...)
+
+		annotation := prepareAnnotationPatches(resource, policyInfos)
+		patches = append(patches, annotation)
 	}
 
 	ok, msg := isAdmSuccesful(policyInfos)
diff --git a/pkg/webhooks/validation.go b/pkg/webhooks/validation.go
index ddad42e725..56aa4d1970 100644
--- a/pkg/webhooks/validation.go
+++ b/pkg/webhooks/validation.go
@@ -52,7 +52,6 @@ func (ws *WebhookServer) HandleValidation(request *v1beta1.AdmissionRequest, res
 
 		engineResponse := engine.Validate(*policy, resource)
 		if len(engineResponse.RuleInfos) == 0 {
-			glog.Errorln("Failed to process validate rule, error parsing rawResource")
 			continue
 		}