In order to reproduce:

[1] Open your file manager (e.g. Windows Explorer in Windows) and create a new folder for templates. Display the content of the new folder with your file manager in order to observe the behaviour.
[2] Start LibreOffice and add the new folder to the paths for templates: Tools > Options… > LibreOffice > Paths > Templates. Mark the new folder as Default Path.
[3] Create new text document and insert some text.
[4] Save document as template: File > Templates > Save as Template… The “Save as Template” dialogue is opened.
[5] Enter a template name (e. g.: Test1) and select a category. Then “Save”. File Manager: A file with the template name is saved to the template folder. (e. g.: Test1.ott)
[6] Close text document without saving.
[7] Create another new text document and insert some text.
[8] Save document as template: File > Templates > Save as Template… The “Save as Template” dialogue is opened.
[9] Enter the same name and select the same category as in step 5. Then “Save”. File Manager: The existing file is replaced by another file with a different name. E. g. Test1 is replaced by Test11.ott. The older template is deleted and no longer available. Expected: A message, that the template already exists together with the question if you like to replace the template.

On the contrary if you use the default template folder in your user profile, the expected message is displayed.