I also have this issue on 16.04 and commenting out the dnsmasq line does not 
always work.
For some reason /etc/resolv.conf does NOT contain the proper DNS entries, nor 
the search.
If I add that manually it even gets overriden every now and then it seems.
The save button on the network manager connection seems to do something too.

Anyway, this is just another annoying, crappy bug that makes Ubuntu less 
suitable for being used as a business laptop or developer machine.
This, percona package bugs, docker setup bugs with vpn, suspend bugs that 
freeze the machine and so on.

Ubuntu, Canonical, are you going to put some developer resources on fixing this?
I am happy to report bugs, but if they don get fixed, I might lose my interest.
thank you

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https://bugs.launchpad.net/bugs/1169437

Title:
  network-manager does not configure local resolver or dnsmasq to use
  the nameserver addresses received from the VPN server

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