At least 46 people have been plucked alive from the water, and the coast guard alerted all vessels in the area to look for others, said coast guard spokesman Armand Balilo.
The wooden-hulled ferry was carrying 73 people on a journey from Manila to southwest Mindoro Island, but it was not clear how many were in the fishing boat, which sank shortly after the accident, Balilo said.
The MV Catlyn B, a wooden hull vessel left Manila port at 9 p.m. Wednesday with 59 passengers and 14 crew members, reports CBS News' Barnaby Lo in Manila. The ferry sank off the coast Limbones Island, south of Manila.
According to the Philippines' weather bureau, a northeast monsoon is affecting most of the Philippines but there is no tropical cyclone. The Philippine Coast Guard says there is no weather disturbance, Lo reports.
The cause of the collision at a time when millions of Filipinos were heading to their home provinces ahead of Christmas Eve was not clear. No weather disturbances were reported in the area.
Sea accidents are common in the archipelago due to tropical storms, badly maintained boats and weak enforcement of safety regulations.
Last year, a ferry overturned after sailing toward a powerful typhoon in the central Philippines, killing more than 800 people on board.
In December 1987, the ferry Dona Paz sank after colliding with a fuel tanker, killing more than 4,341 people in the world's worst peacetime maritime disaster.