In a large pot, combine soy sauce, vinegar, garlic, onion, bay leaves, and peppercorns. Add the chicken and marinade for at least 30 minutes, preferably overnight.
Place the pot over medium heat, and bring the mixture to a boil. Lower heat, cover, and simmer for about 30 minutes, stirring occasionally.
Add sugar for sweetness if desired. Adjust salt to taste.
Increase to medium-high heat, uncover, and let simmer until sauce is reduced to a desired consistency, adding water as needed.
Serve hot with steamed rice.