permission denied with mkdir on Apache/PHP

I have an Apache server running on a Linux OS and when I try to mkdir() using PHP to my /var/www/html/dotproject/files directory I get the following error message :
[client 172.16.0.234] PHP Warning:  mkdir(/var/www/html/dotproject/files/159): Permission denied in /var/www/html/dotproject/modules/files/files.class.php on line 63, referer: http://172.16.0.120/dotproject/index.php?m=files&a=addedit&project_id=159&file_task=1788

I can use the same module to mkdir in the /tmp directory without a problem.

the file system permissions for /var/www/html/dotproject/files are as follows:
drwxrwxrwx  40 apache apache    4096 Feb  1 15:06 files

the user/group portion of my HTTPD.conf are as follows:
User apache
Group apache

output from check.php is as follows:
dotProject System Checks
MySQL      Available      OK
MySQL Server Version      
MySQL Database Connection      Connected      OK
MySQL Database Select      Selected      OK
Operating System      Linux trippliteis2 2.6.9-1.667smp #1 SMP Tue Nov 2 14:59:52 EST 2004 i686
PHP Version      4.3.10      OK
Server API      apache2handler
Web Server      Apache/2.0.52 (Fedora)
User Agent      Mozilla/5.0 (Windows; U; Windows NT 5.1; en-US; rv:1.7.5) Gecko/20041107 Firefox/1.0
default locale      C
session.auto_start      0      OK
session.save_handler      files
session.save_path      /var/lib/php/session      OK
session.serialize_handler      php
session.use_cookies      1      OK
session.use_trans_sid      0      OK
file_uploads      1      OK
/locales/en directory writable            Warning: you will not be able to save translation files. Check the directory permissions.
/files directory writable            Warning: you will not be able to upload files. Check the directory permissions.
/files/temp directory writable            Warning: you will not be able to make PDF's. Check the directory permissions.
root_dir      /var/www/html/dotproject      OK

All other aspects of the Apache/PHP server with the MySQL backend are functional from browsing to database entries. The only issue I have is with using the PHP under Apache to do the mkdir() and file functions. I can log into the Apache account and issue mkdir directives wihtout a problem it's only when the calls are made through Apache/PHP.

the PHP code is as follows:
<?php
mkdir("/tmp/testernew1", 0777);  <==== works fine
?>
<?php
mkdir("/var/www/html/dotproject/files/testernew1", 0777);   <===== fails
?>

Any help would be appreciated.

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