Cut the octopus in two pieces, between the head and the arms. Cut and discard the small middle part between head and arms, where the eyes and mouth are located. You only need to keep the clean head sack and the arms. Next, cut the head in two pieces and clean it from any internal membranes may have been left. Then cut the arms in four pairs. Put the octopus pieces in a non-stick pot, on medium to high heat. It will start losing moisture, and you will notice some water in the pot. Stir for a few minutes until it dries out and changes into a pink colour. Add the olive oil, stir and add the onion and cook until it gets translucent. Add the garlic and continue to cook for another 2-3 minutes, stirring continuously.
In a bowl mix the tomato paste and the grated tomato. Add it to the pot along with the bay leaves, the allspice berries, the cloves and the water. Reduce the heat to medium-low and start deglazing any residue from the bottom of the pot with the spatula. It will come off fast. Let the pot simmering, and cover half of the it with the lid. Stir occasionally, more often when the sauce starts to thicken. Cook until the sauce is thick, then remove the pan from the heat. Serve the octopus stew with some brown or long grain rice on the side.