Mick and Callie are a human boy and his baby sister. They were raised in foster care by a kind woman named Jill, and lived somewhat happily for a time. However, when Callie was adopted but Mick wasn't, Mick refused to be separated from her and in his anger, pushed Jill down a flight of stairs.
In panic, he left her there and fled with Callie, where they ran from place to place hiding from the law, eventually winding up at Phantom Peak.
The Phantom takes the form of Jill, reminding Mick of what he did, and taunting him of the fact that he will never know if she is alive or dead.