Preheat oven to 350F. Prepare a cupcake tin with liners and set aside.
Whisk together flour, 1 cup sugar, cocoa, baking soda, and salt in a large bowl. Make a well in the center of the flour mixture.
Blend water, oil, vinegar and vanilla and pour into the well of the dry ingredients. Whisk until smooth and spoon into the cupcake tins.
Beat cream cheese, ⅓ cup sugar, and egg with an electric mixer. Stir in the chocolate chips. Spoon on top of the cupcakes.
Bake for 20-25 minutes until a toothpick comes out clean.