Heat oil in a large nonstick skillet over medium-high heat. Add chicken, and cook 5 minutes or until browned, turning often. Remove chicken.
Reduce heat to medium; add onion, and sauté 4 minutes or until just opaque.
Add tomatoes, water, and chile pepper to onion mixture; stir well. Bring sauce to a boil; add chicken, and spoon sauce over chicken to lightly coat. Cover, reduce heat, and simmer 50 to 55 minutes or until chicken is done, turning occasionally.
Place chicken on a serving platter, and spoon sauce over chicken.