You get it while exploring Lourle castle, the last dungeon in the game. Quoting from Zelda Dungeon: "It is found in a large Treasure Chest on the fourth floor of the castle. However, it is hidden on an isolated platform, which has no visible way of reaching it. However, if Link extinguishes the torches within the area, two thin bridges appear, allowing Link to reach the platform." Its not necessary for the game, but is very handy for the final boss fight. It stops 75% of damage, but you probably already knew that.