'The captain declared abandon ship... more as a precautionary measure instead of waiting for the vessel to topple over,' he said. 'Everybody was given their life jackets....'

The rescued passengers were transferred to two Aboitiz cargo ships and a navy vessel.

Roger Sinsiron, a passenger on the ferry, told a Manila radio station by telephone that people panicked because they could feel the ship tilting.

'It now feels like the ship is 90 percent tilted on the side,' he said as he waited with about 50 others to be transferred to the cargo ships.

Sinsiron said he was awakened by the sound of crashing cargo as the vessel slanted dangerously.

Sea travel is a major mode of transportation in the Philippines, an archipelago of more than 7,000 islands.

In June 2008, a passenger ferry sank off the central Philippines at the height of Typhoon Fengshen, drowning over 800 passengers.

The country was the site of the world's worst peacetime shipping disaster in 1987, when more than 4,000 people perished in a collision between the ferry Dona Paz and an oil tanker off the central island of Mindoro just before Christmas.