Episode 12 of "The Haunted Palace" kicks off with Gangcheori immersed in grief over his fallen brother, his heart heavy with sorrow. Yeo-ri, attempting to console him, lays the blame of Bibi's untimely demise squarely on her own shoulders. Just as their emotions peak, an unforeseen twist arrives in the form of Kim Bong-in, who arrests them both for trespassing. In a dramatic turn of events, the King steps in to defend them, securing their release with a wave of his royal authority. Throughout this tumultuous sequence, Gangcheori remains eerily subdued, his spirit broken.
It is left to Yeo-ri to unveil the shocking revelation to the King – that Kim stands as the puppeteer pulling the strings. Stunned by the accusation, the King grants Kim the slimmest of doubts, tasking Royal Guard Seo with shadowing him discreetly. Kim, incensed, confronts Pung-san for allowing Gangcheori and Yeo-ri to slip through his fingers, but Pung-san remains indifferent, his focus shifted to the newfound strength of the 8-foot ghost, nourished by Bibi's precious pearl.
Meanwhile, Yeo-ri summons Ga-seop to the palace, charging him with safeguarding the Queen and Crown Prince, while the rest of the group ventures to Yongdam Village to confront Choi Won-u. Amidst this journey, Gangcheori's pain becomes undeniable, a visible weight on the group's collective mind. Even Head Eunuch Kim extends a token of kindness, sending him sweet yugwa candy in hopes of lifting his spirits. Mrs. Yoon, too, sneaks him snacks when his appetite fails him, her gestures touching his heart. With a soft promise to eat later, Gangcheori acknowledges their care.
Delving deeper into familial betrayals, the Queen Mother pays a visit to the King, her revelation like a bombshell. Through her own meticulous investigation, she uncovers that Kim coerced Yeong-in's nanny into facilitating Pung-san's introduction to her. Her heart heavy with regret, she apologizes for the indirect harm inflicted upon the King's unborn child. Adding fuel to the fire, Seo reports that Kim was indeed seen meeting with Se-wan, Pung-san's trusted assistant. The intricate web of deceit tightens, each revelation pulling the threads of power and loyalty ever tighter.
The King, his countenance cloaked in sorrow, summoned Kim to his presence. Ever since the demise of the previous monarch, Kim, tears streaming down his face, had meticulously cleansed the blood-streaked tonggae—his bow and arrow case—and presented it to the reigning King, whom he seemingly shielded, as the King perceived it. Yet, as tears streamed down the King's cheeks, he leveled accusations of treason against Kim. Kim, responding with a sinister smirk, attributed the blame to the King's preposterous reforms against slavery and corruption, insisting he had only supported him so long as he refrained from disturbing the nation's "natural order." Kim reveled in the King's helplessness, lacking proof, and his plan to apprehend Yeo-ri, an outlawed shaman, should she procure any evidence. Unbeknownst to Kim, the King had been concealing the courtiers who bore witness to his confession. Condemned for treason, Kim was exiled, but his assassins effortlessly liberated him. Fuming with rage, he marched towards the shrine and dared the ghost within to slay the King. The ghost, unperturbed by threats, made it clear that he no longer required Kim's services. Possessing Pung-san, the ghost exacted revenge by terminating Kim's life.
Gangcheori, reinstated in his duties, reassured Yeo-ri that his feelings towards her were untainted by malice; his ire was solely directed at the ghost, whom he vowed to vanquish. As they arrived at Yongdam, to avoid alarming Choi Won-u, they disguised their visit as a retreat. Gangcheori pondered In-seon's whereabouts, sparking jealousy in Yeo-ri. Meanwhile, Head Eunuch Kim discovered that it had been a century since King Yeon-jong had graced the village with his presence. During Choi's hospitality, the gang shared an inside joke, with the King playfully mocking Gangcheori's "impeccable manners." Gangcheori, finally tasting the yugwa candy, even shared it with Head Eunuch Kim. The eunuch, hinting at a shared loss, spoke of his own deceased sibling, subtly acknowledging Gangcheori's mourning for someone dear to him.
The King's meticulously crafted plan encounters its first major obstacle when Choi Won-u abruptly ceases his cooperation upon the mere mention of his centenarian forebear, Choi Gil-sang. Their conversation is abruptly halted by the intrusion of In-seon, once again under the eerie influence of the one-legged ghost. Desperate for clarification, the King prompts Choi to weave a narrative, portraying the ghost as Jang Eon-su, a bookseller who had pilfered invaluable tomes half a decade prior. In an unintended turn of fate, Choi inadvertently ended Jang's life while meting out justice. Burdened by guilt, he chose to withdraw from society.
Yeo-ri and Gangcheori intervene, engaging in their typical banter as they attempt to banish the ghost. This time, however, the ghost negotiates a stipulation for his capture: the exposure of a scandalous Choi family tome, which has long served as the cornerstone of his revenge scheme. Yeo-ri relays this to Choi, disclosing that Jang had concealed the book at the site of his demise. Choi, defiant, dismisses it all as fabrications.
A vivid flashback unfolds, revealing Choi Won-u's secret dealings with Jang, where he sold off a collection that included the notorious 100-year-old text, "The Anthology of Light and Darkness." This tome harbors royal secrets capable of tarnishing the Choi family's reputation and chronicles the tale of King Yeon-jong and a military officer. Upon learning of its contents, Choi eagerly offers to repurchase it. However, Jang's greed leads him to conceal the book in Choi's granary and demand additional funds, sparking a furious confrontation where Jang accidentally slices his own leg on a rake. In a moment of hesitation, Choi spares Jang's life, only momentarily.
In the present, Choi discovers the book and prepares to incinerate it, but Gangcheori intervenes, salvaging it and informing the King that it contains the ghost's origins. As The Haunted Palace's Episode 12 concludes, the ghost's fury intensifies upon hearing the King's words, casting Yoon Gap's soul aside while Pung-san's laugh echoes ominously.
