MANILA, PHILIPPINES - THREE survivors from a ferry that sank in the central Philippines have been found, but more than 700 passengers and crew remain missing, a local official said on Sunday.

Police officers found the three in remote coastal villages after they were washed ashore on Sibuyan island, mayor Nanette Tansingco told DZBB radio.

'My policemen had to walk to the area because it cannot be reached by vehicle,' Mr Tansingco said.

The ferry went down several kilometres off the coast of Sibuyan near the town of San Fernando, officials said. The villages where the three were discovered safe are near San Fernando.

The mayor had earlier reported that four bodies had also been found washed ashore after the 23,824-tonne ferry sank.

A small police speedboat reached the wreck site and inspected the vessel beneath the shallow waters.

'They reported to me that there was a big hole amidships,' the mayor said.

President Gloria Arroyo, on a plane halfway to the United States for an official visit, had criticised the authorities for failing to stop the vessel from sailing.

Regional coast guard Cecil Chen said the Princess of the Stars was cleared to leave the port of Manila on Friday morning shortly before the typhoon changed its northwesterly course and raked across the western islands.

With the typhoon approaching, the captain was radioed to take shelter, and 'the captain attempted to do that,' Mr Chen said.

However, the engine failed and the vessel was left stranded in the water off Sibuyan's southeast coast.

'The engine conked out and (with) the vessel dead on the water and no immediate assistance could be rendered on the vessel, it suffered the consequence of drifting to the shallow portion and was grounded,' he said.

Congressman Eleandro Madrona, the legislator representing Romblon province, reported to the civil defence office that the captain of the ferry 'issued the order to abandon the vessel at 4pm Singapore time on Saturday after the hull was holed and water entered the engine room.'

Mayor Tansingco said the vessel later flipped over, with only its bow seen above the stormy waters on Sunday.

However, rescuers could not approach because of the rough seas.

Mr Madrona said 'it is possible there are survivors' who managed to swim to safety on the tiny island of Cresta de Gallo southeast of San Fernando.

Vice President Noli de Castro, presiding over the civil defence office meeting, vowed government prosecutions if it could be proven some officials neglected their duties. -- AFP