The watershed supplies water to some 300,000 residents of nearby Cotabato City.
Kahal Kedtag, a senior officer of the DENR in the Autonomous Region in Muslim Mindanao (ARMM), said the settlers have been ignoring calls for them to vacate the watershed area.
The 365,000-hectare watershed, which covers mountain ranges overlooking Cotabato City, was first declared a forest reservation area about five decades ago by the late President Carlos Garcia.
ARMM Gov. Parouk Hussin, in a recent directive, also declared the forestland a "protected watershed area."
A recent study by the DENR-ARMM revealed that in the last two years, more than 200 families, about 70 of them Ilonggos from North Cotabato, have intruded into the protected area, felled trees without permits, and cultivated crops.