In the latest tragedy to hit the Philippines' notoriously dangerous maritime transport industry, survivors reported mass panic as the Superferry 9 began tilting sharply well before dawn.
Nine hundred people on board were rescued but five were confirmed killed and by late Sunday afternoon 63 passengers or crew members remained unaccounted for, the Philippine Coast Guard said in a statement.
"We are searching all possible areas (for the missing people)," coast guard chief Admiral Wilfredo Tamayo said in a radio interview.
"Navy ships (and) airforce aircraft are still scouring the area."
Tamayo offered hope for the relatives of those still missing, saying some may have drifted away in life rafts or been picked up by private boats that took part in the rescue.
Philippine Defence Secretary Gilberto Teodoro also said local officials were checking to see if any survivors had already reached shore.
The ferry issued a distress call around 3.30 am (1930 GMT Saturday), 11 kilometres (seven miles) off the coast of Zamboanga peninsula and some 19 hours into its journey from General Santos City.
Regional coastguard chief Commodore Rudy Isorena said the cause of the accident was not yet clear and the weather in the area had not been too bad.
"We cannot say yet as to the cause as the attention right now is being given to the search and rescue of passengers," he said.
However tropical storm Dujuan, off the Philippines' northeast coast, has heightened the seasonal southwest monsoon winds, bringing rough weather across the country, according to the weather bureau here.
Deadly ferry accidents are common in the Philippines, especially during the typhoon season.
Ferries, from large ones such as the Superferry 9 to small wooden dugouts with bamboo outriggers, form the backbone of mass transport in the archipelagic nation of 92 million people.
Aside from bad weather, poor maintenance, overcrowding of vessels and lax enforcement of regulations have also contributed to the disasters.
The coastguard report said the Superferry 9, a steel-hulled vessel made in Japan in 1986, had reported having 968 people on board, below its legal capacity of 1,120 passengers and crew.
Authorities and passengers said some people had jumped into the water in panic as the vessel began to tilt to the right, while others were able to get into life boats.
"The ship shifted suddenly and some people just panicked," Roger Sicharon, one of the passengers from the stricken vessel, earlier told DZMM radio by mobile phone as he waited to be transferred to another ship by life raft.
The coast guard said nearby fishing and other private boats, as well as those from the military, had all helped in the rescue operation.
The world's deadliest peacetime maritime disaster occurred south of Manila in 1987 when a ferry laden with Christmas holidaymakers collided with a small oil tanker, killing more than 4,000 people.
In June 2008, a huge ferry, "Princess of the Stars" capsized during a typhoon off the central island of Sibuyan, leaving almost 800 dead.
In the most recent major incident, 12 people were killed after a small ferry sank in rough waters south of Manila in May.
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