Illegal logging is a threat to biodiversity and rural livelihoods in the Northern Sierra Madre Natural Park, the largest protected area in the Philippines. Every year between 20,000 and 35,000 cu. m wood is extracted from the park. The forestry service and municipal governments tolerate illegal logging in the protected area; government officials argue that banning an important livelihood activity of households along the forest frontier will aggravate rural poverty. However this reasoning underestimates the scale of timber extraction, and masks resource capture and collusive corruption. Illegal logging in fact forms an obstacle for sustainable rural development in and around the protected area by destroying ecosystems, distorting markets, and subverting the rule of law. Strengthening law enforcement and controlling corruption are prerequisites for sustainable forest management in and around protected areas in insular southeast Asia.