Where is THEATER MODE on iPhone 12?

There isn't a "Theater Mode" specifically labeled in the settings or features of the iPhone 12.

How to record video in Cinematic mode

1. Open the Camera app, then swipe to Cinematic mode.
2. Tap the arrow in landscape mode to show these adjustment options: ... 
3. Tap the record button to start recording.
4. Tap a subject in the viewfinder to change focus as you record. ... 
5. Tap the record button again to stop recording.

Use Cinematic mode on your iPhone - Apple Support (IN)

Cinematic mode is available on iPhone 13 and higher models.