Officials confirmed Gerardo Joannon also had an "inappropriate relationship" with one mum.
An investigation has begun into claims the priest told middle class unmarried mothers their babies had died during childbirth when in fact they were healthy.
The children were then put up for adoption between the 1970s and 80s.
Regional church head in charge of the probe, Alex Vigueras, said: "The preliminary investigation has established the truth of the accusations...he always knew that both babies did not die".
Mr Vigueras also said the priest even held mass for the supposedly dead children.
He's now been sent to Spain for "reflection" but the church will not punish him further because of the time that has passed.