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Absolutely. Had it happen several time. In fact one time, on what would have been an internal transfer/promotion, the person who would have been my manager came to me and apologized because they had followed my then manager's recommendation. He'd screwed me over to keep me from moving up and pawned off someone he wanted to get ride of.
Most companies I've been with, your manager has to sign off on any internal transfer request. On the other hand, in some cases, you are considered a poor manager if you haven't trained your people to move up and NOT ever having any internal promotions is a negative on that manager's review.