The study was conducted to analyze the linguistic innovations utilized in the lexical and syntactic levels in eacg short story, the literary devices used to express specific cultural values, practices, emotions, and other realities of the Filipinos, and determine how these linguistic innovation depict the cultural milieu of the stories. The five short stories of Manuel Arguilla, namely: How My Brother Leon Brought Home A Wife, Midsummer, A son Is Born, Morning in Nagrebcan, and Rice were used in exploring the indigenization of English. Textual analysis of the five short stories of Manuel Arguilla was done to analyze the nativization of English along two levels in linguistic innovation: lexical and syntactic; literary devices used; and the cultural frame of the stories. Findings of the study were: 1. The linguistic innovations found in the five short stories were: a. Lexical innovations such as single item, hybridized item, contextualized proper names, and calquing. b. Syntactic innovations such as Filipinisms, rhetorical patterning, and vernacular expressions. 2. Literary devices such as the use of simile, metaphor, hyperbole, personification, and nativized images were utilized by Arguilla to express specific cultural values practices, emotions, and other realities of the Filipinos. 3. The short stories of Arguilla contain cultural framework that are rich in learning Philippine family life and values, courtship and marriage, poverty and social stratification, rural place and life, and travel and transportation. The following conclusions are formulated: 1. There are linguistic innovations in the lexical and syntactic levels which depict the cultural milieu in the five short stories of Arguilla. 2. There are literary devices such as simile, hyperbole, personification, and nativized images utilized to express specific cultural values, practices, emotions, and other realities of Filipinos. 3. The five short stories of Arguilla contain cultural framework that are rich in learning Philippine rural values, practices, and emotions. Based on the findings, the following are recommended: 1. Literature teachers should have sufficient background knowledge in language theories and language teaching in order to integrate activities in identifying linguistic innovations under lexical and syntactic levels in their lessons. Having sufficient background in morphology, syntax and semantics would help the literature teacher translate and interpret the meaning of Filipinisms found in English short stories. 2. Both language and literature teachers should use English short stories written by Filipino authors as a springboard in teaching grammar and learning literary devices expressive of a distinct Filipino culture. 3. Literature, values education, history or social studies teachers should maximize the use of English short stories written by Filipino authors in learning Filipino values such as reciprocity, bayanihan system, and respect for elders; appreciation of Filipino traditional practices in child bearing and rearing, farming, and other daily life’s activities; ways of expressing emotions involved in courtship, marriage, and rural life; and barrio setting which includes architectural structures, local ambience of place, including community life. 4. Literature teachers should encourage students to read English short stories written by Filipino writers, and to include the analysis of these short stories in their class. This will enable the students to appreciate the Filipino culture through reading a non-native language which will eventually become their own culture. 5. English short story writing under Filipino theme and setting be included as a culminating activity in literature classes. This will give them the opportunity to write an English short story that would describe and identify their own native values, practices and mores. 6. Finally, further research can be conducted along this line taking into consideration the other elements of the story. The extent, frequency, and approach of teaching English short stories written by Filipinos in a literature class can be included as a part of a research work. This could lead to a broader definition of the characteristics of the new English literature written by Filipino short story writers.