E is correct...!

B seems tempting .. but looking closely , flaws appears....

E

'use' should be used & a semicolon should be used.

People are plural, so we would go with "use" and not "uses"

B. Here ",the most commonly..." seems to modify Tagalog words, which is absurd.

C. "form of them" - The "them" is supposed to refer to Englog, but seems to refer back to the same absurd Tagalog words since it is plural.

E. Correct, the independent clause after the semi-colon is grammatically correct by itself as well as correctly refers to Englog.

"People in Philippines use Englog, an informal type of English merged with Tagalog"
and
"the most commonly spoken form of Englog is called Konyo English"

Both these sentences have a subject and verb of their own and they represent a complete thought. So we need a semicolon to join these two sentence. Only option E uses ";".