I was due for a performance review about a week before I handed my notice in at my old job. The review didn't happen because my boss was incapable of communicating with his employees and actually scheduling appointments with them, but had it happened, I was fully prepared to push for a payrise, even though it would only be a couple of dollars an hour, and for only 3 weeks.
You wouldn't turn down a promotion because you know you're about to hand your notice in. You act like everything is normal and you're going to be working at the company for the foreseeable future, right until the day you hand your notice in, which should be at the minimum notice period.
Otherwise what would happen if you decline a promotion, then your new job offer falls through? You'd be left looking like a prize dick.
Too late though. :)
They don't stay, and you end up wasting a perfectly valid promotion while some one who would stick longer with you could have got it.
Your old manager may have said that to encourage you to stay, but at the end of the day he will promote whoever needs to be promoted in order for that person not to leave. It is all very simple offer and demand at the end of the day.
I was once in a company where the CEO liked to brag that in this company everyone is fairly paid in regards to their competences. You can guess what happened next, we went to have a couple beers with colleagues one evening and started talking about salaries. We realized that we had salaries that didn't really match what the CEO was pretending. The laws of the market are simply too strong, you will always need to sometime pay someone a lot because of circumstances or because that person had another offer to match.
At the end of the day, companies benefit a lot from information asymmetry (they know everyone's salary, but you know nothing). They can claim a lot of things without you having the ability to verify it.