First, do you have specifics on what to find in your loot bags? If you prefer affordable toys, I recommend Anding's toy store in Tutuban. It has wide variety of toys and very affordable. If you want school supplies or other children things they can use at school, there are plenty and cheaper outside 168 mall. Good luck on your preparations!
Tabora St in Divisoria is home to lots of party needs. Name it, you can have it from there. I remember years back, my mom took me there and I would fancy all the toys and party stuff displayed at every inch of the stalls in that street
Check Kyla Mae Balloons Store located at GF City Place Square Mall (near Lucky Chinatown Mall and 168) they offer a lot of pretty loot bags and other cutie party favors in affordable prices.
Ground floor of 168 mall has wide variety choices for lootbags. :)