Morkus from Orkus
The alignment section is very clear in stating that people do not function entirely within one alignment. If the DM is changing a NG PC with a personal code to LN based on that one instance of being outside of NG, he is abusing his authority and the system.Early on we are warned in the 3.5 PhB that:
View attachment 151156
And so, for example:
View attachment 151157
(see also Barbarians, Clerics, Paladins, etc...)
So, anyway, we do have the previously quoted "not a straight jacket"
View attachment 151158
But the very next paragraph seems relevant to @Vaalingrade 's experience.
View attachment 151159
The "not a straightjacket" seems to mean that one shouldn't nit-pick and rules lawyer behavior. It doesn't say the DM shouldn't enforce the rules so that the rules for paladins, and detect evil, and... don't function. In fact it explicitly says "the DM may decide that your character's alignment has changed" because of the characters actions.
Reading that way (in conjunction with the time requirement in the DMG) makes one of the atonement spell options make more sense. It feels like it doesn't make sense at all to me if the characters can willy-nilly change alignment.
View attachment 151160
Moving on to the DMG we get more of where it feels like @Vaalingrade 's DM might have been getting things. (Granted this is 3.5 not 3):
View attachment 151161
View attachment 151162
The "you" in "you are in control" is the DM. And while they aren't a straightjacket (as per the PhB), they also "aren't garments you can take off and put on casually" (above).
While Alignment is a tool in 3.5 to help players, it also seems that the rules have it serving as a DM moderated tag that can have a variety of implications.
So yes, if a PC is consistently behaving in ways outside of the alignment on his sheet and not also behaving consistently in the alignment written down, he's justified in changing that alignment. That isn't what @Vaalingrade described, though. He described DM abuse of authority and acts outside of RAW.