Uh, NO. With exercise, fat is used as fuel and muscle builds through the process of stressing it creating microtears and healing creating bigger muscles. The size of the muscle is a reflection of the amount of stress you put on it. Once you stop using it, the muscle is not longer needed so it "wastes away" (just think of the calf muscles of a person who has been in a wheelchair for a long time -- nonuse of muscle means muscle atrophy). If you eat too many calories, the excess is stored as body fat.
If you bodybuild and get great muscles, then stop bodybuilding, your muscles will shrink in size. If you continue to eat the same amount that you were when bodybuilding, you'll get a layer of fat over top. If you moderate your eating, you will lose muscle still and won't get the fat over top. This happened to a friend of ours who went directly from body building to long distance running. He changed from a mini-Arnold to a super-lean-muscled runner. But his muscle didn't turn into fat.
And sometimes a question is just a question, not an exploration of the metaphysical implications suggested by grammatical sentence construction...sometimes a cigar is just a cigar...
Kira