Though Protestants and Catholics have many points of disagreement, it seems the most fundamental area of conflict has to do with the nature of the Church. Is the Church a visible, physically identifiable reality with an institutional government that keeps guard over doctrine and discipline, or is it a kind of invisible, loose union of various communities of Christians with different opinions on doctrinal questions and no institutional reality beyond the local level? Both Protestants and Catholics acknowledge the Church has an invisible, supernatural element; Catholics, however, assert that in addition the Church has a physical, visible side - that it is physically identifiable on this earth. Protestants, following Luther, tend to view the Church as a fundamentally invisible reality. In this essay, we will examine the biblical passages that point to the Church as a physical, institutional reality in conformity with Catholic Tradition.
Please keep in mind, we do not deny that the Church is also a spiritual-invisible reality, nor do we assert that salvation is strictly predicated only of those who are formally part of the physical Church structure - although we confess such an arrangement to be normative. In emphasizing the physical-institutional aspect of the Church, we do not mean to deny the invisible. Rather, as Christ Himself was both God and man, divine and human, so the Church, too, is a kind of incarnation, divine and supernatural while also physical and institutional.
We will begin in the Gospel of Matthew:
"And Jesus answered him, “Blessed are you, Simon Bar-Jona! For flesh and blood has not revealed this to you, but my Father who is in heaven. And I tell you, you are Peter, and on this rock I will build my church, and the powers of death shall not prevail against it. I will give you the keys of the kingdom of heaven, and whatever you bind on earth shall be bound in heaven, and whatever you loose on earth shall be loosed in heaven.” (Matt. 16:17-19)
As Catholics we are extremely used to citing this passage in context of discussions about the primacy of St. Peter and the prerogatives of the papal office. However, we often overlook the broader implications of the verse: the establishment of a visible hierarchy. When Jesus Christ institutes His Church, He institutes a physical authority structure that will govern that Church. This verse should be read in parallel with Luke 10:16, when Christ says to all the Apostles, "Whoever hears you hears me, and whoever hears me hears Him who sent me." The point is Jesus establishes His Church not just to preach, but to have a real authority, the very authority with which Christ is sent by the Father. This is why the Apostles, always in union with Peter, have the duty not only to preach but also the authority to bind and loose.
In short, a Church with authority to bind and loose must have a physical presence; an amorphous, spiritual communion of all believers might be able to preach, but not bind and loose. This 'spiritual Church' model does not fit very well with our Lord's description of the powers the Church is to have. This is why Protestants have traditionally struggled with these verses about binding and loosing; once we presume that the Church is purely spiritual, "binding and loosing" can only have a spiritualized meaning, which is why many Protestants interpret this verse to mean that individual believers have authority to "bind" evil spirits in the name of Jesus. This makes little sense for a few reasons:
First, it makes sense why one would "bind" and evil spirit, but when would you ever need to "loosen" one?  Second, "binding and loosing" in the rabbinical jargon Jesus is using always refers to the binding and loosing of the faithful to certain disciplines, never to spiritual powers. Third, Jesus says whatsoever you bind "on earth" shall be bound in heaven; he is not referring to the spirit world, but to the world of men. The traditional understanding, that the power of binding and loosing refers to the authority of the Church's legitimate pastors to bind believers in matters of dogma and discipline, fits the passage much better. Because this binding and loosing is also "bound in heaven", it is authoritative - and only a physically constituted authority structure can bind and loose authoritatively. Otherwise, we are left with mere opinion and interpretation.
"He that hears you, hears me; and he that despises you, despises me; and he that despises me, despises him that sent me" (Luke 10:16).
Like the passage about binding and loosing, this passage denotes that the preaching of the Apostles is authoritative. To hear the Apostles is to hear Christ; the preaching of the Apostles is the agency through which faith in Christ is born. "And not for them only do I pray, but for them also who through their word shall believe in me" (John 17:20); St. Paul says the same, "Faith then comes by hearing; and hearing by the word of God" (Rom. 10:17). The word of the Apostles is life-giving; not only this, but despising the message means despising Christ, and thus God the Father. Jesus do not say,"He who does not believe the Scriptures despises me", but "He who despises you despises me." The message comes with authority. An invisible Church - a loose spiritual communion of Christians with diverse beliefs about everything from baptism to salvation to the Rapture to the morality of contraception - cannot preach an authoritative message. There is no common witness. Only a message coming from something that has an institutional nature can possess this kind of authority.
"If your brother sins against you, go and tell him his fault, between you and him alone. If he listens to you, you have gained your brother. But if he does not listen, take one or two others along with you, that every word may be confirmed by the evidence of two or three witnesses. If he refuses to listen to them, tell it to the church; and if he refuses to listen even to the church, let him be to you as a Gentile and a tax collector" (Matt. 18:15-17).
The Church must have a visible structure in order for someone to "tell it to the Church." It could be argued that this simply means to take the problem to the community, but that it says nothing about the nature or structure of that community. We could respond by noting the authority our Lord gives to that community. "If he refuses to listen even to the Church, let him be to you as a Gentile and tax collector." Our Lord expresses a kind of disbelief that someone would refuse to listen to the Church and proscribes a kind of excommunication if they refuse their obedience. A loose spiritual communion cannot command this kind of obedience. The proscription for shunning, "let him be to you as a Gentile and a tax collector", would make no sense in such a spiritual communion because a person who did not like the judgment of one "church" could just go down the road to another that would give him a favorable judgment. The authority Jesus invests in the Church is meaningless unless there is one Church and unless it has some sort of physical constitution.
“I do not pray for these only, but also for those who believe in me through their word, that they may all be one; even as thou, Father, art in me, and I in thee, that they also may be in us, so that the world may believe that thou hast sent me" (John 17:20-21).
Here we see that the Church's unity is the source of the credibility of her message. The oneness of the Church with the Father and the Son is the reason "that the world may believe." The world is to believe based on the unity of the Church, that unity must be visible - otherwise, how would the world behold it? It is true that the Church could have an internal, moral unity, but this alone is not sufficient. It is true that the essence of the Church's unity is an internal reality based on the union of the Father with the Son that Christ bestowed upon His Church. However, unity as a mark of the Church is not primarily this internal unity; it is the external, visible unity that flows from that inner unity. That is why unity is one of the Four Marks; the marks are supposed to be visible realities that identify the true Church and distinguish it from false sects. A unity that is ultimately invisible is of no use and cannot be the Oneness that Christ gave to the Church.
"Jesus said to them again, “Peace be with you. As the Father has sent me, even so I send you.” And when he had said this, he breathed on them, and said to them, “Receive the Holy Spirit. If you forgive the sins of any, they are forgiven; if you retain the sins of any, they are retained” (John 20:21-23).
For the sins of anyone to be forgiven they must be known, and this means there must be someone for them to be told to. Besides implying some sort of auricular confession, this passage also notes the authority of the Church. The Church can forgive sins because it has the authority of Christ Himself. Christ was sent from the Father with "all authority on heaven and on earth", and He confers this authority on the Church through the giving of the Spirit. This is another passage that Protestants have difficulty with because it makes very little sense without understanding the Church in an institutional sense; to whom do we tell our sins in order to have them forgiven if there is no institution which preserves this authority? To each other? To the community as a whole? To whatever Protestant pastor feels comfortable dealing with it? Note that the verse does not say that the pastor will "counsel" you about your sins, but that he actually has the authority to forgive them. This passage alone does not establish that the Church must have a formal physical dimension, but it makes it a lot easier to understand if we presuppose an institutional understanding of the Church.
"The apostles and elders met to consider this question...When they finished, James spoke up...'It is my judgment, therefore, that we should not make it difficult for the Gentiles who are turning to God. Instead we should write to them, telling them to abstain from food polluted by idols, from sexual immorality, from the meat of strangled animals and from blood" (Acts 15:1-20).
The calling of the Council of Jerusalem in Acts 15 presupposes the Apostles viewed the Church as a singular institution with physical, discernible boundaries that were recognizable. Otherwise, how could they come to any uniform decision on points of doctrine or discipline that were binding? The Church does not just meet to share opinions, but to come to an authoritative decision, which they do by sending a letter "telling" the Gentiles what disciplines they are to observe. It does not seem to be possible in the minds of the Apostles that, if the Gentiles did not like this judgment, that they could go find another local church who would offer a different opinion. This is no opinion, but an authoritative judgment followed up with an authoritative directive. Such actions are incomprehensible unless there is some sort of visible Church represented by a single, authoritative hierarchy which makes judgments on its behalf.
"For it hath seemed good to the Holy Ghost and to us, to lay no further burden upon you than these necessary things" (Acts 15:28)
This quote, taken from the letter sent from the Council to the churches, demonstrates that the bishops gathered in council believe their judgment to also be that of the Holy Ghost - "it has seemed good to the Holy Ghost and to us" - the judgment of the Apostles is the judgment of the Holy Spirit. If the Church were understood as a loose, invisible confederation of local churches, they could never make this striking claim of authority, let alone claim, with the authority of God, to tell other Christians what are "necessary things." If the Church is an invisible coalition of disparate Christian communions, the claims of the fathers at Jerusalem would be extraordinarily pompous and presumptuous.
"I appeal to you, brethren, by the name of our Lord Jesus Christ, that all of you agree and that there be no dissensions among you, but that you be united in the same mind and the same judgment" (1 Cor. 1:10).
This does not speak to the visible structure of the Church as such, but it is helpful in demonstrating the unity of the Church which presupposes an institutional character. The Protestant notion of a loose confederation of communities who "agree on essentials", where there is "unity in disunity", is incompatible with Paul's teaching that Christians be united in one mind and one judgment, a unity which, as we have seen from John 17, our Lord says is nothing other than the unity of the Trinity. That kind of unity in judgment presupposes a single institutional framework. Yes, the Church is one Body with many members and diverse gifts, but Paul never says they are to have diverse beliefs or diverse judgments.
"Then after fourteen years I went up again to Jerusalem with Barnabas, taking Titus along with me. I went up by revelation; and I laid before them (but privately before those who were of repute) the gospel which I preach among the Gentiles, lest somehow I should be running or had run in vain" (Gal. 2:1-2).
Despite Paul's reception of a marvelous supernatural manifestation of Jesus Christ, he still feels the need to go up to Jerusalem to confer with the Apostles on the doctrine he is preaching. This suggests that the apostolic hierarchy is functioning as a sort of "gatekeeper" over what is "authentic" Christian doctrine; incidentally, this is the same idea that presupposes the calling of the Council of Jerusalem for the Apostles and bishops to solve the problem posed by Gentiles and the law. Protestants will most likely admit as much, but where they will fall short is in admitting that not only the Apostles but their successors continued to exercise this function, in which case we are talking about a permanent hierarchy, and hence an institution. As we shall see when we get to the letters of St. John the Apostle, this function of the hierarchy as "gatekeepers" of doctrine and discipline is still intact long after the original generation of Apostles had died. Paul's words to Timothy in 2 Tim. 2:1-2, examined below, are also relevant here.
"There is one body and one Spirit, just as you were called to the one hope that belongs to your call, one Lord, one faith, one baptism, one God and Father of us all, who is above all and through all and in all" (Eph. 4:4-6).
Here Paul compares the oneness of the Church with the oneness of God, and says that there similarly must be only one faith and one baptism; how ironic, because the role of faith and the nature of baptism in particular are two extremely contentious points in Protestant theology. A loose communion of churches which bitterly disagree on the nature of faith and baptism, among others, cannot be the "one Body" with "one faith" and "one baptism" spoken of by Paul. And why do these Protestant sects disagree? Is it not because they are physically diverse communities with no formal unity? Formal disunity begets doctrinal disunity; conversely, the doctrinal unity that Paul teaches presupposes a formal, physical unity that goes beyond an invisible confederation of different groups. This is also the most commonly cited text in patristic writings when the unity of the Church is stressed.
"You then, my son, be strong in the grace that is in Christ Jesus, and what you have heard from me before many witnesses entrust to faithful men who will be able to teach others also" (2 Tim. 2:1-2).
Timothy has been ordained by Paul as a fellow bishop, a "minister of God" and "fellow worker in the Gospel of Christ" (1 Thess. 3:2). By tradition, Timothy was Bishop of Ephesus in Asia Minor. In ordaining Timothy, Paul is setting up additional bishops to succeed him in the ministry, and telling Timothy that, even as he was ordained to succeed Paul, he should ordain others who will perpetuate the episcopate. We know from other places in the New Testament (cf. 1 Tim. 5:22, 2 Tim. 1:6) that this perpetuation was carried out through the laying on of hands, which "ordained" others into the ministry, what the Catholic Church calls the sacrament of Holy Orders. Thus there was a physical and formal succession in place which was externally recognizable: those who were appointed leaders had hands laid on them by Timothy or some other bishop, who in turn traced their ordination to Paul or one of the Apostles.
"They went out from us, but they were not of us; for if they had been of us, they would have continued with us; but they went out, that it might be plain that they all are not of us" (1 John 2:19).
Continuing in the fellowship of the Church, which is nothing other than the fellowship of the Father and the Son (cf. 1 John 1:3-4), can only be maintained by remaining within the Church, continuing "with us." To depart from the fellowship of the Church - to "go out from us" in the words of St. John - signifies that it is "plain that they all are not of us." In other words, to be in fellowship with the Church, and hence the Father and the Son, one must remain in the Church. And this Church must be physically discernible; otherwise, how would it be known who had "went out from us" and how could it "be plain"? The Church not only has a physical, visible structure, but it is necessary to remain within it to be in fellowship with the Father and the Son.
"I have written something to the church; but Diotrephes, who likes to put himself first, does not acknowledge my authority. So if I come, I will bring up what he is doing, prating against me with evil words. And not content with that, he refuses himself to welcome the brethren, and also stops those who want to welcome them and puts them out of the church" (3 John 1:9-10).
The Church of 3 John is something that John has formal authority over, and authority that Diotrephes has usurped. Authority cannot be usurped if there is not a legitimate seat of authority which is usurped. And that this authority exists within a formal physical structure is clear when John talks about Diotrephes behavior towards those whom he disagrees with, how he "puts them out of the church." One cannot be "put out" of an informal spiritual communion of believers. This is similar to Christ's statements in Matthew about the excommunication of those who refuse to listen "even to the Church." The possibility of putting someone out of the Church means there must be a plain way of telling who is "in" the Church, which means there must be some discernible physical structure.
This study is not exhaustive, and no doubt more erudite scholars could point out more relevant verses, but hopefully this will serve as a sufficient starting point for discussion on the visible, institutional nature of the Church spoken of by Jesus and depicted in the New Testament. This study could especially be enriched by references to the apostolic Fathers, who only reinforce the idea of the Church as a physical, institutional structure with a supernatural character.
It could, however, be objected that though the Church demonstrated a remarkable moral unity and even physical unity in the first century, this unity was accidental. Any new movement, still fresh and full of creative zeal, tends to demonstrate similar unity. Even Islam demonstrated a similar moral and institutional unity in the first generation. But it is common that, after an idea gains momentum and the movement grows, different interpretations of the initial idea crop up, leaders with different emphases push different approaches, and a legitimate diversity of beliefs, practices and organizations spring into existence. Therefore, the structural unity the early Church enjoyed is a kind of accidental unity, not an essential aspect of the Church's structure.
This seems at first to be a weighty objection, as it is borne out by the history of many other movements in history. It is easily dismissed, however, by noting one simple fact: If the Church's structural unity were not essential to her constitution, we would not see the early Church teaching and behaving as if it was. Yet in fact this is what we have - Jesus, Paul and John all believe and teach the physical oneness of the Church as a point of doctrine, which they could not do if the oneness experienced by the early Christians was simply incidental.
Examine your ecclesiology, my Protestant friends. The invisible Church of Luther is neither biblical nor historical.
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 Some Protestants will employ the language of "loosening" or "releasing" to apply to God's blessing; thus a believer "binds" the devil but "looses" or "releases" God's blessing.