My theory is that he used to be some sort of guardian/protector of the Sparda family. He crossed over to the good side along with Sparda because he did not approve of Mundus and his crafty ways. He has been protecting them ever since, kind of like a key keeper who guards the secrets of Sparda and his family's whereabouts in the human world.
When Eva is screaming: "Sparda they found us!", it is possible that Phineas was abducted, extorted for information and left stranded in Bob Barbas' twisted Limbo world. They found the key to Sparda and wrecked his entire family. This would explain why Phineas recognized Dante as a son of Sparda, realized that Dante was not only his father's son but also possessed Eva's tenacity, why he helped Dante so willingly and why Vergil himself knew about Phineas (something he probably discovered when he was exploring his childhood home in Limbo).
The one loophole I see in my theory is time relativity. Phineas says he is no longer fit for combat so either he was younger when he could actually fight or Mundus somehow managed to weaken him in Limbo, leaving him only with his eye which was later stolen from him as well.
I would totally read that comic xD