Keep squid chilled in the refrigerator at 40°F (4°C) before starting. Maingat na linisin ang pusit - carefully clean the squid by removing the head, beak, tentacles, and transparent quill (backbone) from inside. Cut the squid body into 1-inch rings. Hugasan sa malamig na tubig - wash thoroughly under cold running water and pat dry with paper towels.
Using a large pan set over medium-high heat (375°F/190°C), combine the cleaned squid, half of the minced garlic, vinegar, water, and bay leaf. Pakuluin ng hindi hinahalo - bring to a boil without stirring. This is very important as stirring will cause the squid to become tough. Cook for exactly 3 minutes. Drain the squid and reserve 1 cup of the cooking liquid. Set the squid aside.
In the same pan over medium heat (350°F/175°C), heat the cooking oil until shimmering. Igisa ang bawang, sibuyas, at luya - sauté the remaining garlic, onion, and ginger until fragrant and translucent, about 2 minutes. Add the diced tomatoes and gently mash them with the back of your spoon while cooking.
Ibuhos ang gata - pour in the coconut milk and the reserved cooking liquid. Simmer until you see the oil begin to separate from the coconut milk (called litid in Tagalog), which takes about 5 minutes. This separation is a sign that the coconut milk is fully cooked.
Lower the heat to 300°F/150°C and return the squid to the pan. Add the sliced chili peppers and fish sauce. Pasingawan ng dahan-dahan - gently simmer for 3-5 minutes only. Be careful not to overcook the squid at this stage. Taste and season with salt and pepper as needed.
The dish is done when the sauce is thick enough to coat the back of a spoon and the squid is tender but still has a slight bite to it. If the sauce is too thin, simmer for a few more minutes until it reaches your desired consistency.
Serve hot over steaming white rice. For the best presentation, garnish with toasted garlic bits (sinangag na bawang), sliced green onions, and serve with calamansi halves on the side.
To prevent the sauce from sticking to the pan, maintain low heat during the final cooking stage and stir occasionally. If the sauce becomes too thick, you can thin it out with a small amount of hot water or coconut milk.
Leftovers can be stored in an airtight container in the refrigerator for up to 2 days. When reheating, do so gently over low heat, adding a splash of coconut milk if needed to restore the sauce's consistency.
Important: Never let the coconut milk boil aggressively once added, as this can cause it to separate and become grainy. Keep the heat low and watch for gentle bubbling around the edges of the pan.