The coastguard said on Monday there had been no contact with the 63-ton Piary since Sunday morning when the ship radioed saying it was taking on water while heading for Brooke's Point in Palawan from the Cagayan de Sulu island group.
Naval reconnaissance aircraft dispatched from Palawan were unable to locate the ferry from its last plotted location about 60 nautical miles off Brooke's Point, a coastguard statement said.
The ferry was carrying 68 passengers and an undetermined number of crew. An official said naval vessels of Piary's size would normally have at least 10 crew.
Two coastguard vessels and one navy ship were battling rough seas in an attempt to reach the last reported location, while a second aircraft was conducting a new aerial search.
"The current sea condition is very rough due to strong northeasterly winds prevailing in the area at this time of the year.
"This hampers the ongoing (search and rescue) operation as the rough seas and strong winds posed much danger to small vessels," the coastguard statement said.
Heavy rain has lashed the central Philippines and the northern tip of the large southern island of Mindanao for the past week, unleashing landslides and floods that have killed an estimated 200 people.
"The current sea condition is very rough due to strong northeasterly winds prevailing in the area at this time of the year. This hampers search and rescue operation"
The ferry's disappearance cast a new pall over the Christmas season in the predominantly Catholic country which is still digging out bodies from landslides in the central islands that destroyed entire villages late Friday.
Rescuers said Monday they had recovered 100 more bodies, raising the likely death toll from the mudslides to more than 200.
Nearly a week of heavy rain unleashed landslides and floods on the islands of Leyte, Panaon and Bohol as well as the northeast section of Mindanao, the country's second largest island.
"Massive disaster operations are ongoing and I would like to thank the US government for lending a hand in the delivery of assistance and the search for the missing," said President Gloria Arroyo. Washington has offered all-weather rescue helicopters.
Defence Secretary Eduardo Ermita said Monday that residents of Panaon have given up hope of recovering dozens of people still believed buried in several landslides after a week of heavy rain.
"The stench is overpowering several days later, and the families of the missing in San Francisco (town) have given permission to the government to cover the rubble instead, converting it into a mass grave," Ermita told DZBB radio.
The weather lifted on Monday, allowing military vessels to deliver food, medicines, and equipment to Tacloban on Leyte island. From there the supplies were due to be taken by sea to the worst hit island of Panaon.
Rescue workers pulled out 102 more bodies from the mud and debris on Panaon over the past 24 hours, said regional police chief Dionisio Coloma.
The confirmed deaths from the island accounted for 170 of the 191 bodies recovered so far. Nearly 100,000 people have been displaced across the disaster areas.
The hands of a victim stick out of
the mud after landslides near Liloan
Panaon is home to about 50,000 impoverished farmers. Over the years, they have cleared the interior highlands of forest cover to plant coconut, the Philippines' main agricultural commodity.
"The mountains on Panaon are bereft of trees. We are paying for the illegal felling of trees over the past 10, 20 years," Chief Superintendent Coloma told DXRC radio.
Aerial footage of the island shown on television in Manila showed ochre spots amid green coconut groves where the earth had slid, burying villages on the narrow coastline.
"We have to sustain the environment and at the same time, provide alternative sources of income for the people so that they will be encouraged to plant trees and build forests," said Arroyo.
She ordered the environment and natural resources department to prepare a complete plan "to restore ecological stability in the areas affected by this recent tragedy."
The government said more than 97,000 other people were displaced in 30 towns or cities, and nearly 8,000 are depending on government rations while camped out in government schools and municipal buildings.