The issue was solved. However not through the Apple store. I just bought another 20W adapter + cable and it magically worked. I then tested my previous adapter + cable and the screen indeed became irresponsive after a while (as it usually did) confirming that the solution was not because of a software update.
interestingly, i bought both adapters from an Apple store and checked both serial numbers to make sure both are legit. It seems that there is a defective batch of 20W adapters that Apple manufactured. Not sure why no one publicly mentioned that.
i should note that when I first realized the problem, I did contact Apple support and had a lengthy 1+ hour call describing my issue, which they deemed to be a serious defect. To my surprise they said they cant do anything about it except for replacing my phone with a new one. They thanked me and told me that all my input will be shared with the team. It kinda annoyed me because I was almost sure that the problem will not be resolved by simply replacing the phone. My gf bought an iPhone 13 pro max and had the exact same problem (what are the odds of having 2 defective phones!). So to cut it short, I tried with a different adapter and bam it worked for both of us.
Verdict: replace your adapter and USB-C cable.
