[CentOS] /etc/hosts not resolving hostnames

I have modified /etc/hosts file with IP address and hostname entries.
However, host command is returning 'Host vhost1.example.com not found:
3(NXDOMAIN)'. Also, apache is returning error on start as '[error] (EAI
2)Name or service not known: Could not resolve host name
vhost1.example.com-- ignoring!' . The ssh worked fine and resolved the
hostname correctly (ssh
from same system to itself - just for test). Am I missing something here? I
thought /etc/hosts will be referred for all lookups. Any help??

jM.
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