I am writing a romantic short story and I don't know which type of ending suits my story better. Currently my characters fall in love but one ends up "cheating" (they were never dating or anything) she tries to go on with her life but cant. She gets a chance to see him again and tells him she loves him. I'm not sure whether to make a happy ending where everything goes perfectly or to make an ending where he tells her he doesn't love her. (even though he does).
If you cannot infer that from how the character has behaved and valued throughout the story, if it really is as simple as 'write the whole story, then arbitrarily decide at the end if the relationship goes well or not' to you, I'd dare say you haven't characterised your leads all too well.
If you know your characters, you know how they'd act. Their previous actions, their thoughts and feelings, what they value, it should form an authentic person. If you do this, then whatever decision they make almost effortlessly makes sense from an in-universe perspective.
But if the character who decides to stay with her and the character that rejects her are, for all intents and purposes, interchangeable, I don't think you've characterised him enough. And given that the bulk of a romance hinges on characterisation, this isn't a good sign, being honest.
Personally I would prefer the open end. In romance, there are no happy or sad endings.
Let's take the scene:
... but one ends up "cheating" ...
So: One person was cheating on the other, even considered that they were in love, without telling each other (correct me if this is wrong, that was what I assumed from your text) ... so the most obvious thing would be hate, disgust or something bad ... in that case the sad ending.
Then you wrote
... She gets a chance to see him again ...
That's where I'm hooked. If you look from the human point of view: Who would be with someone, who cheated on you? I assume from your telling, that he was the one who cheated. Why was he cheating? Was there a reason? If there was a reason, did he had doubts about the woman?
If you look at it pragmatically, there is no happy ending per se. The most awesome endings are the open endings. The reader can think of a ending for himself or imagine what happens after that.
The exact same question has been asked before. You may find your answer there. Additionally I'd like to point out that in any story the protagonist must earn the ending.
In popular fiction, the ending is not random, but follows from whether or not the protagonist has succeeded to overcome their weakness. Frodo has managed to not succumb to his wanting to use the ring, therefore he succeeds in destroying it. A hero who fails at self-development fails at their goals and meets an unhappy end.
In literary fiction, the ending follows from the theme of the story. In Pincher Martin the protagonist dies, because that is how William Golding views life. The ending does not follow from what the protagonist does, but from the worldview of its author.
The answer for you will depend on what you write.
But do take note of the reader-focussed answer (by user32282) to the duplicate question: In general, readers love happy endings and hate unhappy endings. No matter how befitting the story, readers of popular fiction prefer to be uplifted to being put down.
To answer this question, I’ll have to channel Mark Baker (a great veteran of this site recently moved on to greener pastures).
What kind of story do you want to write? What is its purpose?
If you haven’t considered these questions already, do it now. Even the pulpiest story has a purpose: to teach a moral lesson, to invoke an emotion or an idea, or just purely to entertain. There must be a reason you wanted to write it. What are you trying to say?
If your story is a classic romance, and it makes sense and is good for the characters to end up together, then let them be together. If you want the reader to feel warm and lovely after reading your story, write that happy ending. If you want to write a beautiful, inspiring tale of love prevailing, just do it. This is what most readers of romance will expect anyway, and this is what they want.
On the other hand, if your purpose is to tell a different kind of romance story, or surprise the reader, or make them experience a small, poignant tragedy, then write the sad ending. This can be common in coming of age stories, for example, if the story is more about the growth of the main character, and the MC grows more as a result of this rejection. As Matthew Dave has said, however, be sure to set the tone of the story to match. There should be hints all throughout that point to this ending, otherwise it will feel like a betrayal to any readers expecting that happy ever after.
I don't think this should preclude a happy ending.
From what you write, it looks to me like a girl, that was not even "dating or anything" boy X but was "in love" with him, had sex with another boy Y. Perhaps she was drunk or high. Perhaps she had some previous relationship with boy Y and it went further.
To my mind, there is no relationship, she and boy X haven't done anything to suggest they are supposed to be faithful. It is implausible for readers to believe they have sworn undying fidelity before their first kiss or date. She may regret having sex with boy Y, but she wasn't cheating and boy Y had no right to believe she was.
You haven't told us enough to make his rejection of her plausible, unless he is just a prude and cannot forgive her for having sex without love of this other boy. This might be due to a repressed culture, as well.
But in the USA, the average age at which women lose their virginity is 16.3 years, and the average age of first marriage in the USA is currently 27 (women) and 29 (men). That is a good 10 years after, and ten sexually active years for most of them. Somehow, all those men and women getting married have "gotten over" their spouse's previous sexual lives, if they even felt there was something to get over. It is not at all common, in the USA, for either men or women to marry as virgins, but they do get married and after that most of them remain faithful to their spouse while married.
There is no reason your story cannot have a happy ending, this all depends on whether the girl has a good excuse for her tryst with boy Y. You can make boy X a jerk, or worthy of love for putting whatever hurt he felt aside in order to try again with her. If he actually DOES love her, then he should be willing to make that sacrifice, otherwise he's a prude and a jerk, whose ego is more important to him than either his own happiness or the happiness of the girl he supposedly loves. That is some kind of mental illness, in my book.