dnsmasq causes inability to resolve DNS queries made by host

On a headless Ubuntu 14.04 vanilla machine I setup dnsmasq as a DNS proxy with the following configuration in /etc/dnsmasq.conf

no-resolv
nameserver=<some working custom dns ip>
port=5555 #to circumvent my ISP's DNS hijacking

Whenever the dnsmasq service is started, the host machine lose ability to resolve any hostnames, however the dnsmasq resolves external queries just fine. A check into /etc/resolv.conf shows only one line of

nameserver 127.0.0.1

So I added a few nameservers to /etc/resolvconf/resolv.conf.d/base and rebooted the machine. The problem still persists even though the added nameservers appears in /etc/resolv.conf

May any Linux guru shine some light on why this is happening? Thank you very much.