The Maharlika II ferry, carrying at least 84 people lost control and was carried away by the current and waves, forcing those onboard to abandon ship off the central island of Leyte, the National Disaster Risk Reduction and Management Council said in a statement.
Rescue ships were able to pick up 55 survivors, the council said.
Ships are still searching for the remaining crew and passengers and there are no reports of any fatalities so far, the council stressed.
"Rescue boats had trouble reaching them because the waves were really huge," spokeswoman Mina Marasigan said.
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The ferry had reported "problems with steering" and had also been buffeted by heavy rains, worsened by Typhoon Kalmaegi which is approaching the northern Philippines, she said.
A coast guard report earlier said that the vessel was stricken about 11 kilometres from the small island of Panaon or about 680 kilometres south of Manila.
Although only 84 passengers and crew were listed on the manifest, it is common practice in the Philippines for some passengers to board such ferries without being listed.
But this has led to frequent accidents that have claimed hundreds of lives in recent years including the world's worst peacetime maritime disaster in 1987 when the Dona Paz ferry collided with an oil tanker, leaving more than 4,300 dead.