Divers on Sunday resumed their search and recovery efforts in the Philippines for survivors, and perhaps bodies, from a ferry disaster that killed at least 39 people and left 80 missing, authorities said.

The ferry sank on Friday after a collision just outside the central port of Cebu with a cargo vessel owned by a company involved in the world's worst peacetime maritime disaster nearly 30 years ago.

Cebu Governor Hilario Davide III said 751 passengers and crew of the Thomas Aquinas were rescued. There were no signs of additional survivors late Sunday, although Davide told reporters that he had not given up hope. Authorities say there were a total of 870 people aboard.

Many of the survivors were sick from swallowing oil and seawater, disaster officials said.

Scores, sometimes hundreds, of people die each year in ferry accidents in the Philippines, an archipelago of 7,100 islands with a notoriously poor record for maritime safety. Overcrowding is common, and many of the vessels are in bad condition.

The 40-year-old ferry was approaching Cebu late in the evening when it was struck by the departing cargo vessel, the Sulpicio Express 7, leaving two huge holes in the latter's bow. The ferry sank in minutes, about a kilometre off Cebu.

Small planes and helicopters also scoured the waters and coastal areas of Cebu island for survivors, officials said.

Divers found four bodies outside the sunken ferry hours before the search was halted, said Commander Noel Escalana, a naval operations officer.

Special equipment needed to enter ship

"During the dive, they saw bodies from the windows," he told reporters, saying the divers did not attempt to retrieve them. "It's dangerous to enter the ship...Because they need special equipment and extra oxygen tanks."

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A survivor of the ill-fated passenger ferry MV Thomas Aquinas leaves the ticketing office of a shipping company on Saturday. (Bullit Marquez/Associated Press)

Escalana added that rescuers had no idea how many people were trapped inside the ship, lying on a seabed around +46 metres below sea level.

Fourteen bodies had been found in the town of Talisay, south of Cebu City, said Imelda Sabillano, another local official.

The Sulpicio Express 7 is owned by unlisted firm Philippine Span Asia Carrier Corp, formerly known as Sulpicio Lines Inc, which owned the MV Dona Paz ferry.

That vessel collided with a tanker in the Sibuyan Sea in December 1987, killing 4,375 on the ferry and 11 of the tanker's 13-man crew.

Captains to be questioned

The owners of the ferry involved in Friday's accident said it was carrying 723 passengers, 118 crew and 104 20-ft containers. It had an authorized capacity of 1,010 passengers and crew and 160 containers.

'We felt the cargo ship hit us and minutes later we noticed our ship was listing. I grabbed a life vest and jumped overboard. I saw many passengers doing the same.'—Passenger Aldrin Raman

The captains of the two ships are alive but have yet to be questioned, said Rear Admiral Luis Tuason, the coast guard operations chief.

Abaya said initial information showed the cargo ship loaded with container vans bound for Davao on the southern island of Mindanao hit the ferry's "vulnerable part" on the right side.

"We felt the cargo ship hit us and minutes later we noticed our ship was listing," passenger Aldrin Raman told reporters. "I grabbed a life vest and jumped overboard. I saw many passengers doing the same."

One of the crew said the ferry sank within 10 minutes.

"The collision left a gaping hole in the ferry and water started rushing in, so the captain ordered (us to) abandon ship," the crew member said. Most of the passengers were already wearing life jackets before the ship sank, he added.

Another passenger, Jerwin Agudong, said several people had been trapped. "It seems some were not able to get out. We saw dead bodies on the side," he said.

Fishermen on shore said they saw flares.

"It was very dark and we could hear a lot of people shouting, asking for help," said George Palmero, a 35-year-old fisherman who helped pull 10 survivors from the water.