Preheat the oven to 400°F Lightly grease a 9 x 13-inch baking dish.
Heat the oil in a large skillet over med-high heat. Add the onion and garlic and sauté for 3 minutes, until softened. Stir in the tomatoes, chili peppers, oregano, salt, and sugar. Simmer for 15 minutes, stirring occasionally.
Combine 1/2 cup of sauce with the chicken in a small bowl and set aside.
Heat the remaining sauce until just boiling. Place a tortilla in the sauce to soften. Use tongs to remove it, letting the excess sauce drip back into the skillet. Place the tortilla on a plate and spread 2 T of the chicken mixture down the center. Roll it up and place it seam side down in the prepared baking dish. Repeat with the remaining tortillas. Pour the remaining sauce over the tortillas and sprinkle with the cheese.
Bake, uncovered for 20 to 25 minutes, until bubbly and hot. Serve hot, topped with dollops of sour cream and a sprinkling of sliced olives.