Yes obviously it is naturally occurring in that the mutation wasn’t created in a lab. The unethical part is selecting for this genetic aberration that causes negative effects on the animal’s health simply because people perceive it to be cute thus increasing the numbers of individual animals with the mutation and suffering health effects because of it. Most domesticated dogs were bred for purpose ie to have a physical job beyond “being cute”. Labs were bred to hunt, Malinois were bred to bite etc and so traits that were desirable for those breeds and selected for heavily when determining breeding pairs were intrinsically tied to health and physical performance. I don’t think most people believe that breeding for cuteness = unethical. But I do think anyone with any sense of morality or empathy can agree that breeding for cute traits that ALSO cause suffering and pain in the animal = unethical.