Server reading two php.ini files

I have a centos5 server running php5 only (no php4), there is a /etc/php.ini file, and of course there are many /home/domain/etc/php5/php.ini files (one for each domain)

Are both files read for each domain?

I have a domain that needs allow_url_include=On, and it never worked until I added it to /etc/php.ini, but I can see many of the settings I change in /home/domain/etc/php5/php.ini do work.

is this normal?