To disable DNS Forwarding Proxy Local Resolver, do the following:

1. From the Cloud Services Portal, click Manage → On-Prem Hosts.
2. Select the on-prem host to be modified from among the list of on-prem hosts.
3. Click Service and then select DNS Forwarding Proxy.
4. From the DNS Forwarding Proxy options, select Configure.
5. On the DNS Forwarding Proxy screen, select the DNS Forwarding Proxy to be modified. 
6. Switch Local Resolver to Disable.

Click Save & Close to save the updated configuration.