Involved in the caffeine degradation, which is the essential first step for assimilating the carbon and nitrogen in caffeine. Catalyzes the N3-demethylation of theobromine to produce 7-methylxanthine and formaldehyde. Also catalyzes the N3-demethylation of 3-methylxanthine, caffeine, and theophylline to xanthine, paraxanthine, and 1-methylxanthine, respectively. NADH is the preferred substrate. H(+) + NADH + O2 + theobromine = 7-methylxanthine + formaldehyde + H2O + NAD(+) H(+) + NADPH + O2 + theobromine = 7-methylxanthine + formaldehyde + H2O + NADP(+) 3-methylxanthine + H(+) + NADH + O2 = formaldehyde + H2O + NAD(+) + xanthine 3-methylxanthine + H(+) + NADPH + O2 = formaldehyde + H2O + NADP(+) + xanthine Binds 1 [2Fe-2S] cluster per subunit. kcat is 46 min(-1) for theobromine (at pH 7.5 and 30 degrees Celsius). Optimum pH is 7.5. Optimum temperature is 30 degrees Celsius.