Students often pick on tito, but he says that this is a sign that the other students like him. what defense mechanism is tito displaying?

Denial Mechanism 
Which is the refusal to accept reality or fact, acting as if a painful event, thought or feeling did not exist.

He is saying what he wants to think. Also ignoring the problem and showing kind manners that usually makes people mad when they pick on people I don't think he is really doing a defense mechanism but the kind manner thing is kinda a defense mechanism but he isn't really doing that at the exact moment. To me it seems like he is ignoring reality and just relying on what he wants to believe.

Trade schools would be the best option