It is possible to build multiple instance of cargo bay at the same place in a rocket.
Take a look at that screen
As you can see, the frist stage has 2 cargo bay, and one another waiting to be built.
Hopefully, building more than 1 cargo bay at the same place "brokes" the rocket thrust.
As you can see in the screen below, the main engin efficiency turns to 0 km/kg. 
Steps to Reproduce
build a rocket with a cargo bay, and try to build another cargo bay upon the one already existing (or even before it's build)
build a rocket with a cargo bay, and try to build another cargo bay upon the one already existing (or even before it's build)
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