Go to cannon island, there should be a cave near the south. go through using bomb flowers to bomb rocks/cracks, bomb rocks blocking a path to the door on the right of the factory, and in there is...
If you already have the Phantom Sword, then just strike them in the back to kill them. In the Temple of the Ocean King, after you defeat all of the Phantoms at one floor, you get a treasure chest...
after your first visit to the temple of the ocean king to save linebeck, do what the game is implying you do and then you go in the second time grandpa will walk in and say "grab the hourglass up...