A navy plane, coastguard boats and local fishermen were deployed to the waters about two kilometres (1.2 miles) from Burias island, where the ferry sank before dawn, to search for the survivors.
Thirty-four people were quickly rescued but the body of a 58-year-old woman was found and more than 20 others were missing, regional civil defence chief Raffy Alejandro told AFP by phone.
Alejandro said the cause of the sinking had not yet been determined but the ship’s captain, who was among those rescued, reported the vessel may have been unbalanced by two passenger buses and a large truck it was carrying.
“He said it happened so quickly. It just went down in the darkness,” Alejandro said, adding the waters and weather were calm.
The vessel was a roll-on, roll-off ferry commonly used in the Philippines to transport people, vehicles and cargo throughout the archipelago of more than 7,100 islands.
Alejandro said the ferry, the MV Lady of Mount Carmel, was not believed to have been overloaded as it made the journey of about four hours between the two major provinces of Albay and Masbate, more than 300 kilometres southeast of Manila.
However sea accidents are common in the Philippines due to poor safety standards and overloading.
The world’s deadliest peacetime maritime disaster occurred near Manila in 1987 when a ferry laden with Christmas holidaymakers collided with a small oil tanker, killing more than 4,000 people.
In 2008, a huge ferry capsized during a typhoon off the central island of Sibuyan, leaving almost 800 dead.
Alejandro expressed hope that the death toll from Friday’s accident would not rise drastically, partly because the captain said most passengers were wearing life jackets.
“We expect many more will be rescued. We were able to respond quickly,” he said.