Nine years ago, farm labor contractor Juan Corona was arrested in Yuba City, Calif., for murdering 25 transient farm laborers and burying them in peach orchards -- at the time the largest mass murder in American history.

The evidence pointed overwhelmingly to Corona's guilt. Receipts bearing his name were found in the graves of some of the farm workers he was suspected of having stabbed and hacked with machetes and knives. Blood-spattered weapons were found among his possessions. And, most telling, a so-called "murder ledger" of 35 names scrawled in his handwriting was found in his home. Many were the nicknames of the men Corona stood accused of killing.

Corona was tried, convicted and sentenced to life.

Today, however, he is in an Alameda County jail cell in the San Francisco Bay area, awaiting what apparently has become the most expensive retrial in California history.And many observers believe he may not be convicted a second time because evidence was either improperly gathered, has deteriorated or is missing.

"In the meantime, a whole legal industry has grown up around this guy," says one investigator. "The criminal investigation system is inadequate to deal with this. It embarrasses the legal system; it brought out the very worst in reporters, who were stealing evidence, jumping in and out of graves with cameras. It brings out the outrageous."

From the time Corona was arrested in May 1971, the case has had its bizarre legal aspects. For instance, Corona's attorney, Richard E. Hawk, after weeks of prosecution testimony, merely rested his case without putting on a defense.

The prosecution also was flawed. At several points, the trial judge admonished prosecution attorneys for what he called their incompetence in presenting evidence.

Nonetheless, in 1973, Corona was convicted of the 25 murders and sentenced to the California medical facility in Vacaville to begin serving a life sentence. He subsequently was transferred to other prisons, his wife divorced him, he suffered a heart attack, and lost the sight in one eye as a result of a prison fight.

In 1978, California's First District Court of Appeal awarded Corona a new trial because, among other things, it found that his lawyer, Hawk -- who later was disbarred for income tax evasion -- was incompetent. The court implied that Hawk's motive in taking the case was to write a book.

In awarding Corona a new trial, the three-judge appellate court noted, however, that he "was connected to the crime by an intricate . . . wide-ranging and elaborately woven web of circumstantial evidence connecting [him] to the crimes and unerringly pointing to his participation in their commission."

In other words, the court was saying, Corona was probably guilty but had not received due process. And both sides have since pursued intensive investigations to make sure he gets due process this time.

So far, the defense team of Michael E. Mendelson, Terrence Hallinan, Roy Van Den Heuvel and Isaiah Roter appear ahead on points. Evidence relating to 13 of the murders was ruled improperly gathered and thrown out at the trial level.

Sutter County District Attorney H. Ted Hansen has appealed the ruling, however, and a decision is not expected before early 1981 -- by which time the retrial expenses are expected to exceed $2 million.

Meanwhile Mendelson and his associates are working out of a $600-a-month apartment 14 floors above Oakland's Lake Merritt, using a variety of technological tools that includes a video display terminal hooked to a computer model of the Corona case.

Across town, the Suter County district attorney's team has a $1,200-a-month office equipped with similar computer where data is stored.

Because of the publicity-caused change in venue, which moved the case 150 miles from the tiny town of Yuba City to Oakland, the prosecution team has run up large per-diem bills. It cost the prosecution about $100,000 when one member of the team who had worked for nearly two years suddenly quit for personal reasons.

There have been other unusual expenses, including flying in a burial-site expert from Pitman, N.J., with ground-penetrating radar to search 10.7 miles of peach orchard because Hansen is convinced that more bodies are buried there. But digging has turned up only rusted wire, an air pocket, and shells mixed with sand in 15 areas identified as possible burial sites.

Much of the evidence compiled by the prosecution in the original trial may be missing or faulty. Rats apparently have eaten a number of the mumified fingertips Sutter County officials were keeping to identify some of the 25 victims.

Also, seven of eight boxes of what were supposed to be blood samples from the victims turned out to be empty when a New Scotland Yard blood analyst opened them in London. No one knows what happened to the contents. The expert, a deputy director Brian C. Culliford of the Yard's Forensic Science Laboratory, also says there is no way for him to determine whether the blood samples he did test are from animals or humans because they have deteriorated so badly.

Nonetheless, the opposing sides have made six trips to London to confer with Culliford. In addition, both sides have made at least a dozen trips to Mexico to test the theory that Corona's brother, Natividad, may have committed the crimes. Natividad was arrested for a similar machete attack in nearby Maryville before the 25 transients were murdered.

However, a grave in Mexico contained what appears to be Natividad's body.

"I have seen a death certificate, but I don't know if he's dead," one defense source said. The extensive travel, which has cost each side more than $100,000, is necessary, according to defense attorney Mendelson, because "every time they go someplace, we have to schlep after them."

After all this, is Juan Corona innocent or guilty?

"That's the bottom line," declared one member of the defense team. "Nobody gives a . . . .. This case has very little to do with the guilt or innocence of Juan Corona. He has been in prison for nine years without a final determination of guilt or innocence. At what point do you say, 'What's wrong with the system?'"

James Tucker, legislative advocate in Sacramento for the American Civil Liberties Union, defends the cost of the trial. "There is a long way from 'He probably did it,' to 'Beyond a reasonable doubt,'" Tucker said.