Smallest Arduino that can provide 12v for MD10C

You can power an Arduino just fine with 12V, as long as you don't add much other loads to the Arduino (or indeed the regulator will overload). Just add a second connection to your power supply for the motors - best to connect the two right at the power supply to suppress noise making it to the Arduino.

Alternatively, use a buck converter to step down the 12V to 5V and use that to power the Arduino through it's Vcc pin (so bypassing the regulator). 1-2A buck converters are cheap and easy to find.