Killing 2 dogs

I think that the priests wanted to get rid of the competition, so they killed the winning dog. The nun realized that this could point to them as the main suspects, and that they could be in trouble, so she decided to kill their dog herself. Then she decided to use this as an opportunity to beat up Sandokan because of how annoying he'd been. That's my interpretation, anyway, it wasn't stated very obviously so I figure that's what happened.

That question is crucial in understanding the film.
It´s a chamber drama. The society inside the house and outside. And furthermore about scapegoats and how scapegoats stabilize society.
By having killed the dogs they brought up half the village against their "scapegoat". Because he sooner or later would have told the whole village what kind of priests they are and they would go after them. Letting them loose wouldnt have had the same effect.
It is important to know that not all of the priests were child molesters. And even that is questionable in this movie because the Sandokan as a grown up said he truly loved padre Lazcano. Some did other horrible things under chilenian dictator Pinochet. Thats why the one priest laughed as he was asked if he thinks he is a criminal. If he would have refused what he did it would have been probably much worse for some children and mothers. Im not saying its good what they did but things are often more complex as the simple "good" or "bad" answers.