Why is the Catholic Church holy? The Catholic Church is holy because it was founded by Jesus Christ, who is all-holy, and because it teaches, according to the will of Christ, holy doctrines, and provides the means of leading a holy life, thereby giving holy members to every age.
A good tree cannot bear bad fruit, nor can a bad tree bear good fruit. Every tree that does not bear good fruit is cut down and thrown into the fire. Therefore, by their fruits you will know them. (Matthew 7:17-20)
Further reading: CCC 823-829
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