Watchdog enables itself after reset
Following is stated in page 615 of the reference manual, under section 23.3.2:


  The new configuration takes effect only after all registers except
  WDOG_CNTH:L are written once after reset. Otherwise, the WDOG uses the
  reset values by default. If window mode is not used (WDOG_CS2[WIN] is
  0), writing to WDOG_WINH:L is not required to make the new
  configuration take effect.


Adding these lines in initialize_CPU() function under file init.c, I can configure the watchdog timer, and disable it:

WDOG_CS1 = 0x60;
WDOG_CS2 = 1;
WDOG_TOVAL = 0x04;


Also, it is good to note that watchdog timer registers are write-once only. So, individual bit changes are not going to have an effect after first write to the same watchdog timer register.

If user wants to configure any of the watchdog timer registers later on, updates should be enabled in the first configuration. After that following is used to configure watchdog timer the second time. For more information, please have a look at the reference manual.

/* Initialize watchdog with ~1-kHz clock source, ~1s time-out */
DisableInterrupts; // disable global interrupt
WDOG_CNT = 0xC520; // write the 1st unlock word
WDOG_CNT = 0xD928; // write the 2nd unlock word
WDOG_TOVAL = 1000; // setting timeout value
WDOG_CS2 = WDOG_CS2_CLK_MASK; // setting 1-kHz clock source
WDOG_CS1 = WDOG_CS1_EN_MASK; // enable counter running
EnableInterrupts; // enable global interrupt