In file sapi/cgi/cgi_main.c

on line 400 the ini search path is set from the code:

if (php_module_startup(&cgi_sapi_module)==FAILURE) {
	return FAILURE;
}

but the actual -c option is not read until line 442 from the code:

if (!cgi) {
	while ((c=ap_php_getopt(argc, argv, OPTSTRING))!=-1) {
		...			
	}
	...
}

Once I moved the code from line 400 after the -c option was read, it worked prefectly.