Non-equilibrium phase separating systems with reactions, such as biomolecular condensates and bacteria colonies, can break time-reversal symmetry (TRS) in two distinct ways. Firstly, the conservative and non-conservative sectors of the dynamics can be governed by incompatible free energies; when both sectors are present, this is the leading-order TRS violation, captured in its simplest form by ‘Model AB’. Second, the diffusive dynamics can break TRS in its own right. This happens only at higher order in the gradient expansion (but is the leading behaviour without reactions present) and is captured by ‘Active Model B+’ (AMB+). Each of the two mechanisms can lead to microphase separation, by quite different routes. Here we introduce Model AB+, for which both mechanisms are simultaneously present, and show that for slow reaction rates the system can undergo a new type of hierarchical microphase separation, which we call ‘bubbly microphase separation’. In this state, small droplets of one fluid are continuously created and absorbed into large droplets, whose length-scales are controlled by the competing reactive and diffusive dynamics.