Heat ½ cup oil in a large stockpot. Add onion and garlic, season with salt and pepper and saute, stirring occasionally, until onion is translucent.
Add chicken, soy sauce and achuete, then season with salt and pepper. Stir to combine all ingredients, then add the vinegar. DO NOT STIR the pot after adding the vinegar.
Bring adobo to a boil then reduce heat to medium low and cook, uncovered, for 20 minutes, until vinegar is boiled off. After 20 minutes add the sugar and bay leaves and allow to simmer for another 10 to 15 minutes.
In a small bowl, mix cornstarch with a teaspoon of water. Stir cornstarch mixture into adobo then allow to simmer until sauce is thickened and loses the cornstarch taste. Season to taste with salt and pepper. Serve over steamed white rice.